LUMPENPROLETARIAT—One of the biggest schisms on the left of the political spectrum has manifested itself over the last century or more between two broad groupings—namely, anarchists and socialists. The anarchists see no validity (moral or otherwise) in the authority of the state form. Conversely, the socialists have proven to be more optimistic about the possibilities for progressive or radical reforms within the state form. Dr. Mark Leier, a Professor of History at Simon Fraser University in British Columbia, has just published a new pamphlet about this long-running division on the left, taking Dr. Karl Marx and Mr. Mikhail Bakunin as figureheads for these two political tendencies on the left. Indeed, in their time (late 19th century), Marx and Bakunin were (as today) two of the most well-known figures on the left. And this schism eventually shattered the First International (or the International Workingmen’s Association), the first international attempt to unite the left against capitalist exploitation of the world’s working classes.

On today’s edition of free speech radio’s Against the Grain, host C.S. Soong spoke with Dr. Leier about the new pamphlet entitled “Divide and Conquer or Divide and Subdivide? How Not to Refight the First International”. This is a fascinating interview, which provides us with useful background on Marx, Bakunin, the First International, and one of the deepest and most enduring divisions on the left. Dr. Leier compared and contrasted the two hugely influential leftists. And, in so doing, Dr. Leier’s research seemed to suggest(reading pending) that the limitations of their respective temperaments definitely hindered their ability (and, by extension, the ability of their respective followings) to unite an effective and sustainable broad-based anti-capitalist left movement resistance.

Messina

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[Transcript draft by Messina for Against the Grain and Lumpenproletariat.]

AGAINST THE GRAIN—[5 JUL 2017] “Today on Against the Grain, the battle waged between Karl Marx and Mikhail Bakunin within the First International was, according to historian Mark Leier, some of the nastiest sectarian fighting we have seen on the left. I’m C.S.

“Mark Leier discusses the lives and ideas of Marx and Bakunin, and argues that the two men had more similarities than is commonly believed—coming right up.”

[Against the Grain theme music continues]

“And this is Against the Grain on Pacifica Radio. I’m C.S. Soong.

“Two leading radicals—Karl Marx and anarchist Mikhail Bakunin—famously clashed in the 1860s. They bickered and fought and heaped invective on each other. And, as a consequence, the International Workingmen’s Association, known as the First International, split in two in 1872. Hostility and tension between socialists and anarchists continue to this day. And Mark Leier, for one, wonders whether it could have been different. (c. 1:36)

“Leier a Professor of History at Simon Fraser University has compared the background and ideas of Marx and Bakunin and has found many similarities, similarities ignored by or unknown to many who’ve written about or analysed the momentous breakup of the First International. Leier has also analysed the temperaments of these two men for clues into why they disliked and distrusted each other so much. Leier, who wrote a biography called Bakunin: The Creative Passion, has come out with a new pamphlet about Marx and Bakunin. The pamphlet’s title is ‘Divide and Conquer or Divide and Subdivide? How Not to Refight the First International’.

“When Mark Leier joined me from British Columbia, I asked him what the First International was.” (c. 2:23)

DR. MARK LEIER: “The First International was an attempt of a number of left-wing and communist and working class and anarchist political groups to come together to create the organisation, that would help workers across the world build a new kind of solidarity. It was started in 1864. And its first meeting was in London. And its first congress, although they had delegates mostly in Europe, it was helped a year later in Geneva.”

C.S. SOONG: “And what were the roles of Karl Marx and Mikhail Bakunin within the First International?”

DR. MARK LEIER: “The two organisers and radicals represented different wings and different ideas about how the socialist revolution was going to come about. I think the differences have really been overstated.

“But what we see in the First International is a deep feud between Bakunin and his followers ,and the Proudhon followers that were allied with him with a small group of Marxists in there. (3:37)

“And they used—as anyone, who’s been at a co-op meeting or a left-wing meeting or a [] council meeting or a departmental meeting of some kind knows how these things can develop. And they can become very nasty long after everyone has forgotten what the original battles were all about.

“So, one of the things, that happened was the two different sides used some small differences on small matters to become trigger points to engage in a kind of schismatic in-fighting.” (c. 4:04)

C.S. SOONG: “And this in-fighting climaxed with a final split between the two men, between their two factions at the Hague Congress of the First International in 1872. Tell us what happened there.”

DR. MARK LEIER: “Yeah. You know; again, it was very typical of the kinds of things. But, basically, two sides lined up and held various votes on matters. And voting goes back and forth. And, finally, however, Marx and his allies win a couple of crucial votes. And they use that as a way to kick out Bakunin and the Bakuninists.

“And they, then, moved the International’s headquarters to New York City, so virtually nobody could get to the next congress. And the whole thing pretty much wraps up by 1876.

“So, the bitter irony for the left is this attempt to forge a new solidarity, greater unity dissolves into factional fights, into fueding. One side takes its marbles and goes home.

“The anarchists do create another International shortly after that, which continues for some years. And, of course, in the 1880s there was a revival of something called the Second International, which was very much an International of the social democratic party. It does not have the same broad range of left-wing members and ideas in it.” (c. 5:37)

C.S. SOONG: “So, in this pamphlet you have written for PM Press—it’s called ‘Divide and Conquer or Divide and Subdivide? How Not to Refight the International’—you actually go back in time. You look at the upbringings and the years of youth and young adulthood of, both, Karl Marx and Mikhail Bakunin, Michael Bakunin. And it’s very revealing. And it tells me, at least, as one reader of the pamphlet, a lot about who these men were, where they came from, and how, in some ways, similar they were. And that’s part of your point—isn’t it?—that these two men were more similar than one might think based on everything we’ve heard about the antagonism between them. (c. 6:27)

“So, let’s start with Bakunin. You write that Bakunin’s family was part of the Russian nobility. Does that mean, Mark, that his family was rich, was part of the idle rich?”

DR. MARK LEIER: “No, it doesn’t. One of the things, that’s happened in this long feud between anarchists and Marxists between 1864 and the present is that both sides are quick to point out the other as being absolutely unrepresentative of any kind of working class or real left wing movement by saying, in this case, that Bakunin was not a worker, but was an aristocrat. And it is true. But his family was not in the circles of the czar. His estate was pretty far from Moscow and from St. Petersburg. And it did not mean what we tend to think of when we think of aristocrats. You know; we think of Queen Victoria, when we think of the czar. That’s not what life was like.

“The family did control the lives of about two thousand serfs. But that did not confer huge wealth. This was a family, that had more many than peasants—absolutely—but had to pay strict attention to housekeeping, had to pay strict attention to the books in order to keep going. When you look at the letters from Bakunin’s father, it’s filled with—you know; we’re not sure if we’re gonna make it this month. We’re really having a difficult time making ends meet. It did mean that they had the luxury of educating the children. And, so, Michael and his sisters and his brothers got a very good education by tutors, that were brought into the home. They were given the training appropriate for gentlemen and ladies. But it was a training, that was very much instrumental in the sense that you prepare the men to step into careers in the army or as professionals or, perhaps, as people able to manage the estate and to provide the sisters of Michael Bakunin with the graces and skills and personal characteristics, that would allow them to make good marriages. (c. 8:38)

“This is not a family rolling in wealth, although it was certainly enough to send Bakunin off to school where he went to a military academy and took up service in the czar’s army. But he was not one of the idle rich in that sense.” (c. 8:54)

C.S. SOONG: “So, what about Karl Marx’s parents? Obviously, he grew up in Germany, not in Russia. Where did his parents fall within the ranks of German society? And how important was education in Marx’s family, you know, when he was a kid?”

DR. MARK LEIER: “Marx’s family was very similar to Bakunin’s. They were not aristocrats. But his father was a lawyer. He had vineyards, that he ran. So, he had enough wealth to educate the children, enough social status, that Marx’s father would meet with local politicians and had some interest and some political sway, as did Bakunin’s father, but not enough to guarantee careers, not enough to allow them to stop working and simply live off the income produced by workers. That was not their situation at all. (c. 9:49)

“What is interesting to me is that both sides have looked at the parents of Bakunin and of Marx to say: We can dismiss either of them, depending on your side, as being petit bourgeois elements. That cuts both ways. And it is easy for both sides to overestimate the class position of Bakunin and Marx. So, I wanted to pay attention to that to say that they were not unlike rebels, that we see all over the place. If you look at the make up, for example, of the Students for a Democratic Society [SDS], in their very title, they were students. They had some access to education. The Weather Underground, very similar. It’s not true of all organisations, of course. But it’s not a surprise that many people of the left had, at least, some exposure to education. It’s pretty difficult to work all day and, then, go home and become an expert in all the arcane matters of the political economy, that we need to think about on the left.” (c. 10:51)

C.S. SOONG: “Mark Leier is his name. He is a Professor in this History Department at Simon Fraser University in Burnaby, British Columbia. And he’s author of ‘Divide and Conquer or Divide and Subdivide? How Not to Refight the First International’. And he’s also the author of a biography of Bakunin, Michael Bakunin. I’m C.S. [Soong]. And this is Against the Grain on Pacifica Radio.

“So, Bakunin, like Marx, was the oldest of the male children in his family. And you said that he was sent to a—or he went to a military academy. So, I understand that demands were placed on young Michael. But he would develop into some type of military officer. How did he do in school at that academy?”

DR. MARK LEIER: “Well, he was not a great student. His passion for rebellion surfaced early, though not in episodes of organising resistance among his fellow cadets, but in that kind of passive-aggressive behaviour, that is often how people, who don’t have much power, respond. He was, like many students, slow at turning in his assignments. He didn’t do very well on many of his exams. He was considered to be very bright. And, if only he would apply himself, the theory went, he would do very well at that.

“The point of going to military academy was not just to become a soldier, but enlist in the army, with any luck, to have a good war, if such a thing is possible. And it certainly was for officers; it meant escaping and acquitting yourself with some honour, so that you would be rewarded by the system for playing that important role in it. (c. 12:40)

“So, the idea was not to become a career officer, but to be exposed to the circles of power through your service and in that way, actually, add to the family income. But it didn’t work out.

“He did some military service, but finally just went AWOL. He just left. And his family, later, then, had to scramble and say: Well, he was sick. He wasn’t well. That’s why he’s here. He had something of a breakdown. That wasn’t the case. He was sick to death of the military life, sick to death of the discipline, the pettiness of it. In that sense, we can look to some of his personality, leading to his ideas about anarchism, about freedom, and the lack of discipline imposed imposed from above.”

C.S. SOONG: “And Marx, as I understand, he was expected, or at least his parents hoped that he would engage in the study of law. He went to the University of Bonn in Germany, where he studied law. How did that go?” (c. 13:42)

DR. MARK LEIER: “Not so well. He was more interested in writing poetry and in drinking an in dueling. You know? It’s the 19th century equivalent of sex, drugs, and rock ‘n’ roll. And so was Bakunin, of course.

“Both of them—lots of their early correspondence, letters back home saying: Trying really hard. Working really hard. I could just do better if you send me more money.”

C.S. SOONG: “[chuckles]”

DR. MARK LEIER: “It didn’t fool anybody. Both fathers respond: We sent you a pile of money. Most people could live for a year or two. You seem to have burned through it all for months. Maybe you should apply yourself more carefully.

“So, these are some of the parallels, at an early age, between the two men. And I stress the parallels because our sense of them, based only on the feuds of the First International, is that they must have been so very different. They must have been very different approaches to political and economic questions. And they really don’t. I think they have much more in common, which is not surprising, given they had similar backgrounds.

“And the similarities in their upbringings, in their educations, and in their early moves, first, into Hegelian philosophy, as a way to make sense of the world, and, then, into working class politics and left-wing politics—so very similar, that I had to stop and say: What exactly was the huge difference between them? Why couldn’t they get along? Why couldn’t they become—you know—the hottest duo in the pamphleteering world, ’til, say, Gilbert and Sullivan?”

C.S. SOONG: “[chuckles]”

DR. MARK LEIER: “Or some other famous team. You know? [chuckles]”

C.S. SOONG: “G.W.F. Hegel, an immensely influential philosopher, who, as you began to suggest, influenced Bakunin and Marx and so many other people of their generation and subsequent generations. Which ideas of Hegel’s most appealed to Marx and to Bakunin?” (c. 15:49)

DR. MARK LEIER: “Or some other famous team. You know? [chuckles]”

C.S. SOONG: “I think, to both of them, what was so appealing about Hegel is he presented for the first time the idea that change, not stasis and stability, was the human condition.

“If you think about the time, in which Hegel is writing, a time when Europe is changing so drastically, when the economies are in the middle of that shift from hundreds of years of feudalism to this new industrial capitalism that changes everywhere.

“That doesn’t sit very well, if you are a king and want to hold [power] with the divine right of kings, that says: You’re family has been on the throne forever and should be on the throne forever. So, Hegel, by suggesting it was change, that marked human history opened up a whole new world.

C.S. SOONG: “From the studios of KPFA in Berkeley, California, this is Against the Grain on Pacifica Radio. My name is C.S. Soong.

“Donald Trump is a capitalist. On the campaign trail, he may have railed against Wall Street and denounced Goldman Sachs. But he’s named, or nominated, a number of Goldman Sachs bankers to positions within his administration. One of them, Treasury Secretary designate Steve Mnuchin, is a hedge fund manager. [3]

“But, whereas some of Trump’s actions draw headlines, many things he and other capitalists, like Mnuchin, do, they happen under the radar, escaping our notice even though their actions have tremendous ramifications for people and communities and social and political arrangements.

“Max Haiven is a scholar and writer, who has taken the trouble to investigate little-known processes of financialisation and debt. [4] He is Canada Research Chair in Culture, Media and Social Justice at Lakehead University in Ontario, Canada, where he directs the ReImagining Value Action Lab [RiVAL].

“Last fall, Max Haiven and artist Cassie Thornton conducted a walking tour of various sites in San Francisco and Oakland, a tour, that explored issues, that—I venture to say—matter to all people living under capitalism.

“A few weeks later, Max and Cassie joined me to talk about the tour. And, today, we present the bulk of Max’s remarks during that extended conversation, remarks, that address and linked up a wide range of topics and phenomena, including hedge funds, gentrification, Puerto Rico’s debt, greenwashing, the foreclosure crisis, and even the wild parrots of Telegraph Hill.

“I asked Max what motivated the creation of the walking tour and all of the substantive material, he and Cassie presented over the course of the tour.” (c. 7:40)

DR. MAX HAIVEN: “Well, I think for both of us it was starting to collaborate on questions of debt and credit and trying to think through finance and financialisation as a collective experience. It’s something, that doesn’t just affect individuals, but that affects whole populations.

“And Cassie was undertaking a project at Gallery 400 at the University of Illinois-Chicago in June of 2016. And that project focused on the Chicago public schools. And, in the course of that project and examining the bankruptcy of the Chicago public schools, one thing Cassie heard many times was that this situation was very similar to Puerto Rico [i.e., the Puerto Rican government-debt crisis]. And that led us to an interest in Puerto Rico and, eventually, a visit in July and August of 2014 to Puerto Rico, which at the time was in the grips of an incredibly deep debt crisis. And, you know, our visit there was really illuminating. And it was very inspiring in many ways. We met with a lot of activists, who were really thinking about debt in different ways, thinking about debts as, not only financial debts, but the debts of history and the debts of society, the debts that people owe one another, the debts that people owe themselves. (c. 9:09)

“And we came back from that project to the [San Francisco] Bay Area. I think, for me, I was deeply inspired by the question of how debt and how finance travels in ways, that we don’t necessarily fully imagine or fully grasp when we just take it at face value.

“So, I was interested in the way that a debt of a country, like Puerto Rico [or colonial property of the US empire], it sort of swirls and eddies in the same, um, substance, in the same waters, as the debt of home owners in Oakland; or the same waters as students and teachers in Chicago; or the same waters as the politics of international debt, through the International Monetary Fund or World Bank.

“So, I think what really inspired me towards the project was wanting to think through debt in a much deeper, more interconnected way, that sought reach out thickly in, really, complex ways, not only to other forms of debt and other social institutions, but to society, to the life-world, to the sort of ecosphere. I mean when you’re dealing with the topic of debt and financialisation, as you look, as Cassie and I have done over the last six or seven years in our respective work, when you look at it and you begin to look very deeply, you begin to see that it’s interconnected everywhere. (c. 10:51)

“One of my mentors, Randy Martin, who unfortunately died a short while ago, talked a lot about the [financial] derivative, which is this sort of signature technology of finance today, as this technology, which collapses the whole world into—and the whole world’s multiple futures—into one financial technology, which can be used to manipulate and speculate. And, so, when you begin to look into finance and you begin to look into debt, it begins to spread out like the roots of a tree into all sorts of nooks and crannies. It begins to touch all sorts of different social processes from housing to international trade to, you know, work and the effects of work and the effects of housing and the effects of changes in the cities on our bodies.” (c. 11:47)

C.S. SOONG: “The tour began at Farallon Restaurant in San Francisco, a posh establishment one block from Union Square. Why, I asked, did the tour begin there?”

DR. MAX HAIVEN: “So, we chose Farallon Restaurant first because we actually wanted to go to the Farallon Islands, which are a group of islands 20 miles west of the Golden Gate Bridge. And we’d selected the Farallon Islands for a number of reasons. The first was it shared the name with Farallon Capital, which is a hedge fund, that became very central to our project. It became a sort of icon or a cypher for financialisation writ large because it owned, both, a huge amount of debt of the country [sic] of Puerto Rico and had been extremely instrumental in the gentrification of west Oakland. And those were two processes we wanted to compare.

“But we wanted to link that hedge fund to natural processes and to this sort of ecological sphere because our project involved thinking through the process of invasive species as well.

“And those things came together for us around the Farallon Islands, which are sort of shrouded in sort of myth in the Bay Area, that are very central to imperialism, various imperial powers, including Russia and the United States and Spain and England over the centuries. But, of course, we couldn’t take all of our guests to the Farallon Islands because it’s a full day trip to get out there; and you have to charter a boat.

“So, instead, we looked around for a place to begin this tour. And Farallon Restaurant presented us with a interesting, uh, venue, not only because it shared a name with the Farallon Islands and Farallon Capital, but because it was also one of these venues, that seems to be a solidification of transnational capital flows. (c. 13:56) [snip](c. 14:25)

Parasitic financial forms are not an aberration, but central to capitalist modes of production, imperialism, and variants of colonialism. The Puerto Rican government-debt crisis, for example, is the continuation of imperialism and colonialism by other means.

C.S. SOONG: “I asked Max Haiven what he stressed about processes of financialisation and their impact during the presentation he and Cassie gave at Farallon Restaurant.”

DR. MAX HAIVEN: “One of the things, that has been really central to my thinking about financialisation over the last two years is trying to move away from the idea that the forms of technologically-driven finance, that we see today—things like [financial] derivative contracts, futures, currency trade, high frequency trading algotrithms—these are somehow an aberration from or a sort of pathology of otherwise perfectly functioning markets. I think it’s a very pernicious idea because, actually, when we look further back in history, we see that finance has always worked in the interests of imperialism and colonialism. (c. 15:26)

“And, when we were in Puerto Rico, uh, it was—it just brought home again that, you know, the debt that Puerto Rico has been forced to go into over the last 30 years as a result of neoliberalism, um, and as a result of the continuing colonial presence of the United States in that country, this debt is simply the continuation of imperialism and colonialism by other means.

“And there’s a comforting narrative, that we have, that would say that today’s hedge funds or financial apparatuses are like weeds or like invasive species, that come in and destroy an otherwise functioning capitalist economy. But, in reality, the capitalist economy has always been poisonous and has always been damaging.” (c. 16:17) [5]

C.S. SOONG: “The tour, then, moved to the office building, that houses Farallon Capital in San Francisco’s Financial District. Farallon Capital Management’s website says it manages equity capital institutions, including college endowments, charitable foundations, and pension plans, and for high net worth individuals. The firm, which employs about 180 people is headquartered in San Francisco and has offices in London, Singapore, Hong Kong, Tokyo, and São Paulo. What should we know about Farallon Capital Management?” (c. 16:48)

DR. MAX HAIVEN: “Farallon Capital Management became a really important character in the drama, that we were unfolding. It really sits at the nexus of capitalist forces, that are ecologically destructive, that are imperialist and colonialist in nature, and that were really participating in the shaping of urban space in the [San Francisco] Bay Area.

“Just to back up a tiny bit, a hedge fund, um, for those who don’t know is, essentially, an elite club for very rich investors. If you want to invest in Farallon Capital, you need to have a buy-in of five million dollars to put down on the table, that gets you, essentially, to be part of this elite club of investors. And a hedge fund is an institution, that specialises in accumulating extremely potent information and data and making high-risk, highly leveraged financial gambits.

“So, they get the investments of their initial investors. They’ll borrow even more money on top of that initial investment. And they’ll put that into something, that they think is going to be very high risk, but high reward. So, they’re really a kind of financial shark. They operate with a sort of exteme, violent efficiency in markets.

“And it’s not a coincidence that we worked with this metaphorical shark because one of the things, that the Farallon Islands is most famous for is, in fact, the greatest concentration of great white sharks anywhere in the world. It’s one of the most scientifically significant areas to study these incredible creatures. You know, it might actually be an injustice to sharks to liken a hedge fund to them because a shark has its own logic. It turns out that sharks are quite sociable creatures. They have their own rhythms in nature. A hedge fund is an institution—a highly calibrated, a highly torqued institution—for making as much money as possible for its investors. (c. 18:57)

On financial predators and a case study of colonial debt bondage

“So, Farallon [Capital Management] has about $21 billion dollars under its management. It used to manage the endowments of a huge number of America’s leading public and private universities. It has major stakes in, sort of, privatisation schemes in Russia, in Argentina, in Indonesia.

“It’s run, or was founded, by Tom Steyer, who is a very influential figure—uh, for reasons, that we’ll get into a little bit later, I suspect, uh—who, with an initial investment in the 1980s of $15 million, by the time he retires had a stake of $1.2 billion dollars in Farallon Capital.

“And one of the things, that we discovered when we were in Puerto Rico is that this, uh, this hedge fund has invested quite a bit in the loans of Puerto Rico and is one of the so-called vulture funds, that bought up Puerto Rico’s debt for pennies on the dollar, but is now demanding full payment to get as much money as they can out of the island.

“We know that Puerto Rico, as a whole, has something around the realm of $76 billion dollars in debt. The only information we can gather is that, at the very least, they bought up $55 million dollars worth of that debt and is now part of a consortium of hedge funds and vulture funds. They are holding that debt over the head of the island, demanding that things like schools, that things like public services be cut back in order to pay out these investors and these vulture funds.

“So, for us Farallon was a particularly acute example of a sort of animal or organism or species, that evolved within the high pressure ecosystem of today’s financialised markets and could offer us a sort of target and also a sort of metaphor for something much larger and more interconnected.” (c. 21:08)

C.S. SOONG: “That’s Max Haiven. And I’m C.S. And you’re listening to Against the Grain on Pacifica Radio.

“Max Haiven is a writer, educator, and movement organiser based at Lake Head University in Ontario, where he is Canada Research Chair in Culture, Media and Social Justice. You are listening to an account of a walking tour, that Max Haiven and his collaborator Cassie Thornton conducted last fall in San Francisco and west Oakland, a tour during which Max talked about all kinds of pressing issues: financialisation, gentrification, and new forms of economic colonialism.

“A few weeks after the tour took place, Max Haiven spoke with me about it. I asked Max Haiven to elaborate on how hedge funds and vulture funds operate, what kinds of debt do they try to acquire, and how do they hope to make a profit off of it.” (c. 21:59)

DR. MAX HAIVEN: “So, most governments around the world, both, at the federal level and the municipal level and, then, at the level of states, operate and make up their annual budget shortfalls by going into debt or, sometimes, if they have a large capital project, like building a school or a highway, they’ll go into debt in order to make that possible, rather than saving up money over 20 or 30 years. And the typical way that they do that is by issuing bonds.

‘So, what will typically happen is a bond is simply a debt. It’s an agreement to pay a certain amount of money at a certain point in the future with a certain rate of interest. And bonds, you know—hundreds of thousands, perhaps, millions of bonds circulate around the world each day.

“And the colony of Puerto Rico, or the autonomous economic zone, as they are called, um, over the last 40 years, especially, has been selling more and more each day to international markets, which, essentially—when we say international markets—we mean the banking and financing sector. But, because Puerto Rico is a colony of the United States, both, its constitution and numerous laws, that the U.S. Congress has passed concerning Puerto Rico’s economic status, have made it, essentially, into a bit of a Shangri-La for investors.

“For instance, one law that states that before any other expenses are, um, are incurred by the government, they will uphold their obligations to bondholders first, which is a sort of policy, that’s not in place in almost any other place in the world and, certainly, not in any of the other states because it essentially means you have to pay off foreign banks before you pay teachers and police and politicians. You know? (c. 23:51) [6]

“So, the island of Puerto Rico had been made into this very enticing location for international banks and the people, that they serve, which is like hedge funds and pension funds and insurance companies, for them to make large investments in the country.

“So, what would, essentially, happen is: Let’s say Puerto Rico needed a hundred million dollars this year. If they weren’t in an economic crisis, they would issue 100 one-million-dollar bonds. And those one-million-dollar bonds would say: In ten years time, we’re going to pay you back a million dollars plus five percent per year interest. Those bonds would, then, be sold on to major banks. And, they, would in turn sell them on to their clients, pension funds, insurance companies, even retail investors, like, you know, workers.

“But what happens is, as the government—as any government around the world—gets more and more shaky, the bonds get downgraded. And, in fact, it’s understood that many of those bonds won’t be repaid, especially if the country’s in a deep financial crisis, like Puerto Rico. At that point, everyone who owns the bonds of Puerto Rico knows they’re not gonna get their original million dollars back. So, they start trying to sell that bond for less than the original outlay of cash. So, maybe, they lent a million dollars expecting they would get, you know, a million dollars plus the interest back. But, now, they’re willing to sell that bond for $700,000 dollars or $500,000 dollars, just in the hopes of getting some money out of the deal.

“And, eventually, these bonds become so toxic, that they can be bought for, literally, pennies on the dollar. A million-dollar-bond of the country of Puerto Rico, or the island of Puerto Rico, could be circulating on global markets for $10,000 dollars or $20,000 because no one believes they’re actually gonna get paid.

“And, if you were a hedge fund, what you specialised in is looking around the market and finding easy prey. And you see that you could buy a million dollars of Puerto Rican debt for $10,000, for basically one percent of its stated value. You snap up that bond. And, then, you’d go to the government of Puerto Rico and say: We want a million dollars. We want the million dollars you owe us. Puerto Rico says: We can’t pay. And the hedge fund, or the vulture fund, in this case, says: Well, give us all your money, that you can pay. So, you may never actually pay back that million dollars. But, at least, we’re gonna get $30,000—$40,000—dollars for this bond out of you; and we come out $20,000 or $30,000 ahead. So, it’s a technique of extorting governments out of their money. [7] (c. 26:40)

“And the final thing I would say about it is there are organisations, like Farallon, that specialise in doing this all over the world. The euphemism, that they use is distressed assets. But what’s really going on underneath the surface is that places, like Puerto Rico, should never have been forced to go into debt in the first place. The reason they were in the dire economic position, that made them borrow from global markets in order to build schools and hospitals and highways was the fact that they are, first of all, a colony of the United States. And, then, second of all, that they’ve been undergoing and, in fact, had been forced to embrace the logic of neoliberalism, which means that corporations and the rich get to keep a huge proportion of their money. And governments are starved for funds, meaning that they have to go look to the private sector, to banks, to hedge funds for the funding, simply to continue to operate in the interests of their citizens.

“So, these debts never should have been incurred. And, now, the debts are being used to squeeze even more money out of the population at the expense of people’s health and wellbeing.” (c. 27:50)

On the wild parrots of Telegraph Hill (San Francisco)

C.S. SOONG: “The walking tour then moved a block east to a park, a public space with clusters of tall trees, inhabited by very loud birds. Why, I asked Max, did he and Cassie make this stop on their tour?”

[Dr. Max Haiven discussed the re-wilding of urban spaces by invasive species and what that adds to the extractive capital of a city, which is “re-groomed for tourists”, and informs questions of invasive species and invasion as an analogy for the invasive and extractive capital of Farallon Capital Management.](c. 32:47)

On the role of Sullivan Management in home foreclosures, which have disproportionately impacted people of colour (e.g., West Oakland), through gentrification processes

DR. MAX HAIVEN: “Sullivan Management Company is responsible, by some estimates, for buying up 40% of the foreclosed homes in downtown Oakland, following the 2007-2008 [Global] Financial Crisis. As has been recorded by a huge number of studies and NGOs in Oakland and beyond, the 2007-2008 foreclosure crisis disproportionately hit black and brown families the hardest. And in West Oakland, a huge proportion of the families, that lost their homes in this traditionally black neighborhood were black and brown families. And the people, who benefited, were largely speculators from outside the neighborhood.

“So, Sullivan Management, for instance, would typically buy an old Victorian home. There are some very beautiful homes in that neighborhood for around a hundred thousand dollars. And two or three years later, after a very minimal renovation, would sell it for somewhere in the range of $400,000 dollars. (c. 34:13)

“This had the effect of really driving up, to a huge extent, property rates in Oakland, in West Oakland, and in the Bay Area more generally, such as we’ve seen over the last few years, where just in the last couple of years rent and property prices of all three cities of Berkeley, Oakland, and San Francisco have increased at rates between 15 and 30 percent per year, essentially driving out lower income residents, driving out, really, anyone, who doesn’t have a really well-paying tech job.

“SMC, the company, is a key part of this. But it is only one part of a constellation of small companies owned by one man, whose name is Neil Sullivan. Other companies are REO Homes, which are one of the ones responsible for flipping the homes and renovating them. There’s a number of other groups with the acronym SMC.

“But what’s significant for us, in addition to finding a red-handed culprit for gentrification and one, who still remains what NGOs point to as a slum landlord, they have kept a hold of many of the homes and now rent them out for exorbitant rates to residents.

“The other thing, that’s significant, though, is that Neil Sullivan was bankrolled in this venture by Tom Steyer, the CEO of Farallon and a number of other senior executives at Farallon as well. We don’t know if Farallon Capital, itself, invested. But, certainly, a number of the high-ranking people of the company did, sensing an opportunity, taking that shark-like financial acumen, that they developed at Farallon and applying it now closer to home towards this golden opportunity to buy up these foreclosed homes. Between 2009 and 2014, for instance, there were over 357 evictions just in West Oakland alone. Seven percent of all the homes in West Oakland were foreclosed at some point since the crisis began. And, of those, 42 percent have ended up in the hands of investors. And that’s a very conservative figure. So, really, and at this point, SMC or its affiliated companies operates at least 250 units of rental housing in that neighborhood. And they’ve charged exorbitant rates for it. (c. 36:53)

“So, for us, SMC represents another crystallisation of what happens when liquid financial capital courses around the world, like an invasive species, coming up through the cracks within neighborhoods and within communities, that have been caused by generations of systemic racism and systemic exploitation and really taking advantage of a weakened ecosystem in order to maximise their own growth, growth whose energy and real wealth is being extracted out of the community and into the hands of, you know, extremely wealthy people, like Tom Steyer, the CEO of Farallon, and others.” [8] (c. 37:37)

C.S. SOONG: “Max Haiven is Canada Research Chair in Culture, Media and Social Justice at Lakehead University in Ontario. And he’s also an organiser and a writer. We’ll take a short break and return with more of Max Haiven’s comments. Please stay with us.”

[brief music break: instrumental acoustic jazz music with horns and percussion](c. 38:53)

C.S. SOONG: “And this is Against the Grain on Pacifica Radio. My name is C.S. Soong. Max Haiven teaches at Lakehead University. And he’s the author of several books, including Crises of Imagination, Crises of Power: Capitalism, Creativity, and the Commons. And, with Alex Khasnabish, The Radical Imagination: Social Movement Research in the Age of Austerity. He also co-directs, with Alex, the Radical Imagination Project. Max Haiven spoke with me last fall [i.e., 2016], a few weeks after he and his collaborator, a social practice artist named Cassie Thornton, conducted a walking tour of San Francisco and Oakland, that examined the impact finance capital has on locations near and far; on people in Puerto Rico; on neighborhoods, that are gentrifying; and on major party politics.

“We, now, pick back up with the tour, which proceeded along the streets of West Oakland, and stopped in front of a residential building. What, I asked Max Haiven, did he and Cassie find significant about the building?” (c. 39:55)

DR. MAX HAIVEN: “Well, this house was a sort of typical project for SMC. It was an old, very beautiful Victorian house, that had this kind of a lumpy addition on it, that was really aesthetically brutalist. And it was clear that they had seen the footprint of this property as one to extract as much value from tenants as possible. [9] So, they built on extra rooms to this house, that looked, you know, incredibly ugly, really belying SMC’s claim on their website and elsewhere that they were participating in the beautifying of a derelict neighborhood.

“And, in fact, the whole framing of SMC’s rhetoric about West Oakland being derelict, as it being an undervalued neighborhood, their whole triumphant narrative of themselves as coming in and greening the neighborhood. All of this is typical of the language, the violent language of gentrification. And what it serves to do on a fundamental level, we wanted to point out at this station, is it serves to hide or disguise, who’s actually producing wealth. Capitalism has always thrived, like a weed, on preying on the biodiversity and economic diversity and the diversity of cooperation of workers. And gentrification, as a sort of current day manifestation of that system, really thrives on and maximises the extraction of the energy, that people over generations have put into their neighborhoods, that make it a beautiful and a wonderful place to live. (c. 41:36)

“So, when gentrifiers, like SMC come in and claim that they are the ones, who are ‘adding value’, quote-unquote, to the neighborhood, they’re not only stealing the value, that was already there, they’re re-writing history to make themselves into the triumphant capitalist, you know, actors. And, in this narrative, they can have no better teacher, in fact, than Tom Steyer, whom we mentioned before, the founding CEO of Farallon, who actually retired in, I believe, 2012—I think; I don’t have the number right in front of me—but, who was a really central figure in the growth of this little hedge fund from a sort of boutique investment to, as I mentioned, a hedge fund, that was managing the portfolios of major institutions, like universities, and really a major player in financial markets. (c. 42:32)

“Um, Steyer was an alumnus of Goldman Sachs and a variety of other investment banks. But, interestingly, once he became the CEO of Farallon, he began to develop, at least on the surface, a sort of green [i.e., environmentally friendly] consciousness. Though, especially since his retirement, but even in the preceding that, he really wanted to put himself forward as kind of the Democratic Party answer to the Koch Brothers—this enlightened billionaire, who was gonna use his money without apology to influence politics. He was a major, major fundraiser for, and gave many, many donations to, the Democratic Party. When Obama came to do fundraising in San Francisco in 2014, that event was held at Tom Steyer’s house. Tom Steyer and his wife run together a ranch for ecologically-grown beef. They give tons of money to renewable research at Stanford University, which is their alma mater. And many people, in fact, speculate that Steyer, who is now very much involved in the Democratic machine—a major fund raiser for Hillary Clinton, is eying eyeing up the possibility of being the Democratic candidate for, uh, the governorship of California. He certainly has the money to make that possible. (c. 43:55)

“But, interestingly, part of that campaign centers around his high position as a bank, that’s called Beneficial State Bank, which was first called First California Bank. And this is a bank located in Downtown Oakland and—that is, also he runs with his wife Kat Taylor—and it claims to have this enlightened mission, an enlightened green capitalist mode of operation. Yes, it’s a bank. But it’s a bank with what they call a social license. It’s part of this new wave of social enterprises, that don’t get rid of the profit motive, but suggest to their customers and suggest to the public that they are, you know, a beneficial gift to the community. So, Beneficial Bank gives a great deal of money, or claims to give a great deal of money, to sort of green capitalist causes, to local urban gardens, to sustainable ventures. They also offer informal types of lending and new types of lending to immigrant communities and to poorer communities. But, also, it’s important to note that Beneficial State Bank is still a bank. And, in fact, SMC, the company, that we spoke about earlier, that’s participated in gentrification, and many of the clients, to whom they sold foreclosed and flipped homes, got their new mortgages from Beneficial Bank. So, they are also very much participants in this system of gentrification. (c. 45:23)

“And, when we zoom out and look at the whole network of capitalist relations, we’ve identified with Farallon Capital, with Tom Steyer and his political connections, with his wife Kat Taylor and Beneficial State Bank, with SMC, we see that, while capitalist enterprises can present sort of green face to their activities, when they choose to do so, we need to be extremely wary and see that, as long as some people get to control vast, vast quantities of wealth, we should not simply be satisfied with them giving us a few crumbs back, even if they got green food coloring on them.

“So, for us, visiting this home was an opportunity to think through these sorts of questions and to, again, sort of zoom out and see the whole process at once.” (c. 46:14)

C.S. SOONG: “The walking tour wrapped up in front of a community garden in Oakland near where—if you know the city—San Pablo hits West Grand Avenue.”

DR. MAX HAIVEN: “This garden is called Afrikatown. And it is a sort of parallel project to the Qilombo Community Social Center. Qilombo was founded in 2011 and is a collaboration between anarchists and many members of the West Oakland black community, that has been sort of staged as a holdout against gentrification, a hub for organising against the continued theft of the neighborhood and the value, that people there have created.

“And the garden, itself, is being used to grow a whole variety of crops to teach children and everyone in the neighborhood more about how to become self-sufficient. Qilombo, itself, is named after a maroon community in Brazil and indigenous people escaped the tyranny of colonialism to form their own community. It’s a sort of mythic place in history and in the history of social movements and anti-colonial movements. And we thought it would be an excellent place to end for two reasons. The first is that Qilombo really represents an attempt to take a just and poetic revenge, in some ways, against the system of racial capitalism, that has given rise to the forces of gentrification, that has allowed invasive species, like hedge funds to thrive and allowed them to continue the work of colonialism into a new century through the use of financial apparatuses. (c. 47:58)

“So, for us, Qilombo really represents a hopeful seed of some new type of invasive species, what those in power will label as an invasive species, but is, in fact, a new way of living together, a new form of common growth.

“And, it’s no coincidence, as you can well imagine, that Qilombo and Afrikatown is located on land presently claimed by none other than Neil Sullivan of SMC Homes and his backers at Farallon and Beneficial State Bank.

“And it’s significant that over the last several years Qilombo, because they’ve been able to cultivate a wide community of support and solidarity, has managed to fight off several eviction notices and still hold on, rooted in that community, and really hold down that area, so that something else can grow.” (c. 48:54)

C.S. SOONG: “As our conversation about the tour came to a close, I asked Max Haiven about a broader project, that he’s involved in called the University of the Phoenix.”

DR. MAX HAIVEN: “The University of the Phoenix is an umbrella organisation, through which Cassie [Thornton] and I collaborate on radical alternative financial literacy. In the lead up to, and the wake of, the [Global] Financial Crisis, this idea of financial literacy was offered to the public, as a means to privatise a social problem. And the social problem was that people, who didn’t own stocks and weren’t part of the 1% were poor. But it was, instead of pointing out that this came from systemic and structural problems within capitalism, instead we were told that people were financially illiterate, that they didn’t know how to manage their money. And financial literacy education was sold to the public in schools and in community centers as an answer to this problem. (c. 49:55)

“For us, financial literacy is a really important thing. But the way it’s typically thought, we think, is harmful. And we wanna teach financial literacy in much more profound ways, that allow people to understand financialisation at a political level and also at the level of their own lives and bodies. [10]

“So, the University of the Phoenix offers classes in alternative financial literacy. It’s also an opportunity for us to build collaborations and offer education with, and for, the dead. We’re interested in the ways that the ghosts of the past haunt the present and the way, that we can invite those ghosts into the classroom, both, as teachers for the living and as learners, themselves, because our hope is that the dead will rise up in vengeance against the system of capitalism and systems of patriarchy and white supremacy, which has led to so much suffering of their descendants. (c. 50:56)

“So, we have an interest in seances, the paranormal, we have an interest in working with the dead in a profound way in order to shed new light on the timescales and processes of the capitalist present.

“And, finally, the University of the Phoenix, like any good for-profit university offers its faculty as consultants. And Cassie and I, both, operate as revenge consultants. We hope to work with a wide variety of community groups and artistic spaces and beyond in order to be able to work with people to figure out what kinds of revenge might be possible, that don’t simply end in violence and heartbreak and terror, but instead end in the growth of new species of resistance, invasive species, indigenous species. This is the ambition of this umbrella project, under which we are organising a whole variety of different activities.” (c. 51:54)

“In the time we have remaining, I want to present some of what Max said in an appearance on this programme in 2014. Here he talked about the financial sector and, specifically, the impact of financial sector logic on everyday life.” (c. 52:18)

DR. MAX HAIVEN: “I think, once we begin to understand financialisation in a broader scope, we can begin to see its traces all over the place. I mean I’m a university teacher and quite involved in the politics of the university. So, one of the places I see it most frequently is in the way that students, parents, governments, and university administrators increasingly have come to understand education as a quote-unquote ‘investment‘. And we hear this sort of nauseating rhetoric all the time, that students shouldn’t expect that government will pay for their education, but instead that they should take out a loan and leverage that debt, that financialised debt in order to buy a credentialed university education, which they’ll then be able to go on to the job market and sell back to recoup their costs.

“Of course, this comes at a time when, in the United States alone, student debt has topped one trillion dollars and when default rates and delinquency rates on student loan debt are skyrocketing. And, in fact, many new reports are emerging to indicate that the weight of student this student debt on younger generations is fundamentally eroding their life chances. They are putting off having families, buying homes, becoming, you know, economic members society because of the weight of this debt.

“And this is, I think, symptomatic of a much deeper shift in our society, as this neoliberal ideology takes hold we are all encouraged to see ourselves as individual competitive agents, rather than any form of collectivity. We are no longer encouraged to see ourselves as citizens, who care for one another, let alone something more that I would like to see, which is as commoners, as people, who are fundamentally dependent on one another, who create common forms of wealth and common forms of community care. All of that is pushed aside in favour of this idea that we should all see ourselves as miniature Donald Trump. And, of course, Donald Trump is an excellent example of precisely how this sort of ideology enters into the mainstream and popular culture. The popular show The Apprentice, which has been on, you know, for many years and was really organised around his persona, really attempts to show us what the exalted neoliberal financialised subject looks like, one who has no compulsion [sic] about betraying one’s friends and allies, one who ruthlessly competes to outperform one’s peers, this is the image, that’s held up to all of us now.

“And, so, another example, for instance, is the incredible popularity of home renovation reality television shows, where the idea is you’re gonna go and buy a home, not because you have a commitment to community, not because you want a roof over your head, but because you want to use it as a financial asset, that you can leverage for greater gain in the future. (c. 55:04)

“And this idea has really seeped out and saturated throughout all of society, so that increasingly we are talking about everything as investments. There are, now, a plethora of relationship advice books, which advise the reader to understand themselves not as a lover or friend or companion, but as an investor in relationships. There is [sic] advice books, that encourage parents to educate their children as savvy financial investors, to see the family as a corporation, that needs to be managed, as you would manage Goldman Sachs. This is extremely dangerous. And it’s dangerous, not only in the sense that it normalises the neoliberal paradigm of individualistic competition, but it also valorises, really, the worst elements of our human nature, in a sense. And it fundamentally privatises our sense of the future, so we can no longer rely on on another to provide for our futures. Then, it all just becomes the competitive work of the individual. For instance, as we allow pensions and old-age security to increasingly be privatised and downloaded onto the individual, we become increasingly adept at attempting to get as much as we can for ourselves.

“And, of course, the irony here is that the more and more that we invest in privatised savings, the more and more we invest, in the United States for instance, in 401(k) plans or, in other countries, in highly privatised forms of retirement savings, those funds are actually being used to leverage by major investment banks and others in order to undermine the economy, that we live in. It is precisely those sorts of funds, that are investing in private equity firms, in hedge funds, in major investment banks, which are doing the neoliberal and financialised work of dismantling the economy as we know it.” (c. 56:58)

C.S. SOONG: “Max Haiven is an organiser and writer, who teaches at Lakehead University in Canada, where he directs the ReImagining Value Action Lab [RiVAL]. His books include Crises of Imagination, Crises of Power and Cultures of Financialization: Fictitious Capital in Popular Culture and Everyday Life. And he’s currently working on a book tentatively titled Art After Money, Money After Art: Radical Creative Strategies Against Financialisation.

“And this is C.S. suggesting the important thing is not to stop questioning. And we hope you’ll join us next time.” (c. 57:35)

[Against the Grain theme music, credits, etc.]

[Community announcement: premiere of interactive documentary Jerusalem, We Are Here; this is a benefit event for Middle East Children’s Alliance (MECA)] (c. 59:59)

Max Haiven connects the dots between financialization, gentrification, indebtedness, and hedge fund activity. Haiven co-conducted a walking tour of sites in San Francisco and Oakland, sites that offer a microcosm of capitalist dynamics that have enriched a few while burdening and displacing countless others. His analysis encompasses the foreclosure crisis, Puerto Rico’s debt, and even the wild parrots of Telegraph Hill.

Also see past Against the Grain broadcasts, which feature Dr. Max Haiven:

Terrestrial radio transmission, 94.1 FM (KPFA, Berkeley, CA) with online simulcast and digital archiving: Against the Grain, 31 OCT 2012. Broadcast summary: “Max Haiven talks about the positioning of universities and the role of cognitive labor in the neoliberal capitalist order.”

Terrestrial radio transmission, 94.1 FM (KPFA, Berkeley, CA) with online simulcast and digital archiving: Against the Grain, 1 MAY 2013. Broadcast summary: “A May Day cornucopia, with contributions from Aziz Choudry, Jodi Dean, Chris Dixon, Max Haiven, and Richard Peet; Pacifica Radio May Day reports from years past; and more.”

Terrestrial radio transmission, 94.1 FM (KPFA, Berkeley, CA) with online simulcast and digital archiving: Against the Grain, 9 JUN 2014. Broadcast summary: “Max Haiven on what the financial sector and its logic are doing to corporations, to governments, and to the way we live and think.”

Terrestrial radio transmission, 94.1 FM (KPFA, Berkeley, CA) with online simulcast and digital archiving: Against the Grain: Max Haiven on Financialization’s Reach, 16 MAR 2015. Broadcast summary: “The financial sector of the US economy is incredibly powerful and influential, but its impact on our social and cultural lives is rarely examined or acknowledged. Max Haiven contends that financialization has, in a certain sense, colonized our attitudes, our beliefs, and our sense of the future. Haiven believes we need to chart a very different path forward, both imaginatively and practically.”

[5] Also see economist Dr. Michael Hudson’s work on financial warfare and neoliberal capture of public assets through debt bondage.

[6] Of course, as we know from modern monetary theory (MMT), the United States can always afford to make good on the bonds, which it issues, as it is the sovereign currency issuer of the U.S. dollar, not to mention that it is the world’s dominant reserve currency. For more on MMT, see:

[8] For an excellent case study, which provides rigorously-researched history of “generations of systemic racism and systemic exploitation”, see Race, Real Estate, and Uneven Development (2002) by Dr. Kevin Fox Gotham, which describes the structural racial residential segregation, which has systematically segregated and prevented blacks, Americans of African descent, from integrating into the USA’s post-WWII suburbanization. Dr. Kevin Fox Gotham, building on the important work of Massey and Denton, American Apartheid (1993, Harvard University Press), and others, he shows how Kansas City developed a racist template followed by other cities for the deliberate creation of ghettos.

Also see the work of Dr. Erik K. Olsen’s, including “Class Conflict and Industrial Location” (2010), Review of Radical Political Economics 42(3) 344-352. (Dr. Olsen was your author’s professor of Urban Economics at the heterodox economics department at the University of Missouri-Kansas City.)

[9] Also see economist Dr. Michael Hudson’s work, as well as other Marxian scholars (not to mention Dr. Karl Marx, himself) on the parasitic nature of the rentier class. (Pronounced ron-tee-aye)

[10] On advocates for grassroots approaches to working class financial literacy education: Free speech radio listeners will recall Catherine Austin Fitts being featured previously on Guns and Butter and Flashpoints. On Guns and Butter, Catherine Austin Fitts mainly discussed various issues of government corruption and financial looting. But, if memory serves, Catherine Austin Fitts attempted to produce regular community financial education segments. (See Flashpoints and Guns and Butter archives.) Another free speech radio guest on a more grassroots financial literacy approach is Dr. Ellen Brown, author of Web of Debt and The Public Banking Solution, on state banks and public banking. Dr. Brown is also the founder of the Public Banking Institute. But, perhaps most importantly, we must recall the Dr. Stephanie Kelton (University of Missouri-Kansas City), Dr. L. Randall Wray (UMKC), et al., on modern money theory (MMT), and beneficial MMT-based deficit spending, including the job guarantee programme. (See endnote [6] above.)

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[Time-stamps correlate to a downloaded mp3 copy, not the audio stream playback.]

LUMPENPROLETARIAT—Of all the philosophical strands touching upon political economy, which we might encounter at the university level, apart from Marxian economics and Marxian philosophy, one of the most interesting with respect to sociopolitical (or socioeconomic) emancipation is the Frankfurt School of social theory. [1] Back at the heterodox economics department at the University of Missouri-Kansas City (UMKC) a few years ago, at least one friend always championed the Frankfurt School and other neo-Marxists. [2] As I studied undergrad economics at UMKC, with an emphasis on Marxian economics and modern monetary theory (MMT), and sought to find their intersectionality or synthesis, my radical friend was praising the virtues of Adorno, Marcuse, Horkheimer, and other theorists associated with the Frankfurt School. Perhaps, we agreed that Dr. Karl Marx has contributed the most accurate description of the mechanics of capital, its nature, form, and dynamics, its circuital expansion. But the Frankfurt School has presented compelling critiques of the various Marxian schools of thought, which have succeeded Marx. Certainly, as Marxian scholar Dr. David Harvey reminds us:

I teach Marx. And a question I always ask is: What can we learn from Marx? And what do we have to do for ourselves? And I think that that’s a very important question to ask because very frequently, in the past, people have read their Marx and then sort of, I don’t know, plunked reality into it and, then, said: Ah! Here’s the answer! I don’t think you can do that. I think there’s only a limited set of things we can learn from Marx.

Paradoxically, we can’t really learn that much about socialism or communism or the future from Marx. We can learn a great deal about how capital works.

Marx will always be important for understanding capital, what it is and how it works. But, as Dr. Harvey reminds us, and critical theory shows us, we must constantly grapple with the reality of capitalist relations in our own time and place. So, it was a great joy to find today that free speech radio’s Against the Grain was featuring a discussion with Professor Martin Jay (Department of History, University of California-Berkeley) about his book, Reason after its Eclipse: On Late Critical Theory. The title evokes Max Horkheimer‘s important classic, The Eclipse of Reason (1947), a foundational text within critical theory. Critical theory extends many of the important lines of theoretical inquiry elaborated by Dr. Marx and others since, who have sought to expand and build upon earlier work. There is always so much for us to read. But Professor Jay’s book On Late Critical Theory is an important read, which provides us with a philosophical study of reason and the foundations of intellectual inquiry. And, of course, critical theory is required reading for all self-respecting intellectuals (assuming that’s not a contradiction in terms).

This is a fascinating discussion, which touches upon the ideas of Adorno and Habermas, of course, but also those of Marx, Weber, Hegel, Horkheimer, Marcuse, and others, including topics ranging from Horkheimer’s views on art and aesthetics to argumentation; Marcuse’s structural transformation of the public sphere, valuing evidence and its centrality to a responsible press; Habermas’ view of communicative rationality; and persuasion. Listen (and/or download) here. [3]

Messina

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[Working draft transcript of actual radio broadcast by Messina for Lumpenproletariat andAgainst the Grain]

“Today on Against the Grain, reasoning may be something we do. But reason is an idea, whose content and fate have been debated and discussed over the course of two millennia. I’m C.S. Soong. U.C. Berkeley historian Martin Jay joins me to discuss his new book, Reason after its Eclipse: On Late Critical Theory, after these news headlines.” (c. 1:15)

“From the studios of KPFA in Berkeley, California, this is Against the Grain on Pacifica Radio. My name is C.S. Soong.

“Many have been tempted to think, in times of relative peace and prosperity, that the world is moving toward ever greater rationality, that Reason, with a capital ‘R’, is in the process of becoming realised. Notions like that take a hit when times turn dark, when, for example, fascism rears its ugly head. And, then, people wonder: What’s happened to reason? What’s happened to rational thinking? And: How did this—you might call it—crisis of reason, how did it arise? And what can we do about it?

“A collection of thinkers associated with the Frankfurt School, which was established in Germany in the 1920s and, then, relocated to the U.S. because of Nazism, a number of Frankfurt School thinkers grappled with what they saw as a kind of crisis of reason, with different thinkers taking different approaches to the question and coming up with different ways to address it. (c. 6:53)

“The ideas of two Frankfurt philosophers, Theodor Adorno and Jürgen Habermas, are among the many ideas investigated in a new book by Martin Jay, a book called Reason after its Eclipse: On Late Critical Theory. In the book, Martin Jay, a history professor at UC Berkeley, described how Adorno looked to aesthetics for answers. (c. 7:17)

“For Adorno, writes Jay, art was not the betrayer of reason, but rather its salvation.

“Jay also examines the very different approach taken by Habermas, a second-generation theorist of the Frankfurt School. Jürgen Habermas, in his effort to restore a robust notion of reason, pointed to a rationality rooted in the give and take of communication, of giving reasons and persuading through logical arguments and listening to the arguments of others.

“When Martin Jay joined me in-studio to discuss Reason after its Eclipse, I began by asking what concept of reason he was claiming, or observing, had been eclipsed.” (c. 8:00)

DR. MARTIN JAY: “This an impossible question to answer. And, in fact, I address precisely the impossibility in the introduction [to my book] to the extent that the defining of a concept, the limitational concept, the belief that you can create a single unilocal meaning of a concept is precisely what intellectual history, um, tries to avoid. What intellectual history is most interested, I think, in doing is tracing the sometimes adventitious, sometimes meaningful—let’s call it—pilgrimage of a word or a term or a constellation of terms over a long period of time.

“So, reason—not only in English, but in all the various other languages going all the way back to the Greek logos, and Italian [ratio], and a lot in between, reason‘s had many, many different meanings over time.

“So, what the book tried to do is to be fair to the variety of meanings and not privilege one as the essential meaning. Having said that, the Frankfurt School, itself—the people about whom I’m writing about in this book—did have an implicit normative notion of reason, which was, in their eyes, eclipsed in the modern world in favour of a debased version, which they saw as, essentially, instrumental. (c. 9:26)

“So, even though I’m being a little reluctant to give you a definition, they, I think, implicitly, held on to a normative notion.

“Now, one of the arguments of the book is that they never fully, at least not in the first generation of critical theorists, never fully defended a viable notion of what that alternative to instrumental reason was. They derived somewhat from Hegel, some from Kant, some from other metaphysical sources, maybe even theological sources, sometimes psychoanalytic sources, but there was never an absolutely coherent version. (c. 9:29)

“So, the second generation of critical theorists, most notably Jürgen Habermas, had to provide a kind of paradigm shift, in which a different version of rationality became his normative standard against which instrumental reason was measured. And, so, the book tries to tell the story, precisely, of that shift from the first to the second generation, with Habermas’ alternative—communicative rationality—being the new norm.” (c. 10:27)

C.S. SOONG: “And, by instrumental reason, you mean reason used as a means to some end?”

DR. MARTIN JAY: “Uh, Max Weber was the first, really, to point this out, that there was a substantive notion of reason, one which emphasised values, one which emphasised ultimate, we might say, concerns, ethical as well as cognitive. That, on one hand, and other types of reason, formal, and, most importantly for our purposes, instrumental, which emphasised the rationality of finding means, finding instruments to achieve ends, which are themselves arbitrarily and contingently given. (c. 11:05)

“So, instrumental rationality was, basically, the rationality of a kind of efficiency, a kind of willingness to suspend a deeper question of why you’re doing something. So, for example, you might have, during wartime, a situation, a goal of winning a battle, of winning a war, and you might use the most efficacious way of doing that, which would, perhaps, be to, uh, wipe out the population, civilian as well as military, against whom you were fighting. But this doesn’t, of course, raise the difficult, ethical question of: Who should, in fact, be seen as the enemy? Who should not? For what reason is the war being fought? Is it possible to minimise collateral damage? And all the other things, that are ethical questions.

“So, instrumental reason, essentially, brackets the ends, sees them as arbitrary and irrational, and reduces reason to merely its means-ends possibility. (c. 12:01)

C.S. SOONG: “Now, in the eyes of the Frankfurt School, the first generation, is there a way to generalise about what they saw instrumental reasoning coming out of, in other words, what they saw instrumental reason replacing? What was the prior version of reason, that maybe they approved of, or maybe they felt was more benign than instrumental reason?”

DR. MARTIN JAY: “The first generation, basically, held on to a notion of what might be called an emphatic or a metaphysical notion of reason, which was a notion prior to the reduction of philosophy to science and the triumph of modern technology, one which emphasised the role, that reason played in creating a nexus, we might say, of means and ends, in which the ends were themselves rationally chosen.

“Now, what makes it particularly difficult to figure out exactly where this notion of objective and non-instrumental reason can be located is that there was a metaphysical residue, which said that somehow it existed in history, it existed out there, it existed in social relations, rather than, uh, human interaction, understood as the process of giving reasons, or the process of reasoning. So that, there was what might be called an inherent reason in the world, which was a residue of a sort of metaphysical idea that the world, itself, was the creation of a rational god, could—even though we may not fully understand it—could be, at the deepest level, inherently rational. (c. 13:37)

“Now, there are two versions of this, we might say. One is what’s called a conservative version: The world is, with all its apparent, let’s say, surface or, let’s say, contingent irrationalities, on the deepest level, is reasonable, is rational, is somehow meaningful. And, one might argue, this was best expressed in the work of the 17th-century philosopher Leibniz, who contended that there was a principle of sufficient reason underlying all the happenings, that occurred, even those, that seemed most basically irrational or unethical. So, he came up with theodicy, which said that partial evils were part of a general good. This is one version.

“The second version, we might call it, more or less Hegelian and, certainly, Marxist, was that reason exists, but not yet in a rational form, that the world is potentially rational. The world has the tendency to become rational. The world is, in complicated ways, moving through an historical process, which has as its goal the realisation in the institutions and practices of humankind a version of reason. (c. 14:43)

“But, here, too, it happens, if not automatically, at least on a level, that is almost like providence, in the religious sense, that happens behind the backs and even against the wills of individuals. And this was a version, that Marxism emphasised as an automatic process of, you know, basically, social revolution-producing outcomes, that would be beneficial to humankind.

“So, the Frankfurt School, to some extent depended on this latter version, but, basically, became disillusioned with the Marxist notion that this was inherently happening in a meta-narrative of historical progress, which left them with a dilemma because, if reason was not already in the world and reason was not, in a way, the talus of the world inevitably happening in a future, then it left it, in a way, hanging in the air. There was no, what you might call, human agent or a social agent bringing about reason. It had to be done by will. It had to be done by practice. It was not yet in place. And there was a kind of, we might say, loss of faith in the possibility of rationality finally being achieved.

“So, to some extent, the Frankfurt School fell back on a rather desperate utopianism, in which, although the present was growing increasingly problematic—and remember they were writing, many of them, during the period of fascism—and the enlightenment, instead of being a progressive, upwardly mobile, we might say, phenomenon, was dialectically going also in a negative direction. This is the idea of dialectic of enlightenment.

“They were left with, really, no hope beyond a kind of—we might call it—faith and prefigurative ciphers of utopian, maybe, art, maybe in other aspects of human imagination, but certainly not sufficient to create much confidence that reason would be achieved in the near or even in the far future.” (c. 16:39)

C.S. SOONG: “So, you focus part of the book on what Max Horkheimer, a prominent, a leading member of the Frankfurt School, thought about reason and what had happened to it, what the future might bring. What did Horkheimer contend is the diseaseof reason?”

DR. MARTIN JAY: “Well, this is a very troubling question because, if you have a notion that there was once a robust positive—let’s call it—objective or emphatic notion of reason, which is then replaced by a diminished instrumental version, then, it’s a fairly simple narrative of decline. If your replace that with the notion that, from the very beginning, from the origins of human logos, of human use of reason, to survive in a hostile world there’s always already a kind of negative fatality, in which reason is used for self-preservation. And self-preservation involves, basically, dominating a hostile environment, which creates a kind of technological instrumentality, which becomes inherently anti-human and certainly hostile to nature in its more benign forms. (c. 17:49)[snip] “

The Frankfurt School (German: Frankfurter Schule) is a school of social theory and philosophy associated in part with the Institute for Social Research at the Goethe University Frankfurt. Founded during the interwar period, the School consisted of dissidents who felt at home neither in the existent capitalist, fascist, nor communist systems that had formed at the time. Many of these theorists believed that traditional theory could not adequately explain the turbulent and unexpected development of capitalist societies in the twentieth century. Critical of both capitalism and Soviet socialism, their writings pointed to the possibility of an alternative path to social development.[1]

Although sometimes only loosely affiliated, Frankfurt School theorists spoke with a common paradigm in mind; they shared the Marxist Hegelian premises and were preoccupied with similar questions.[2] To fill in the perceived omissions of classical Marxism, they sought to draw answers from other schools of thought, hence using the insights of antipositivist sociology, psychoanalysis, existential philosophy, and other disciplines.[3] The school’s main figures sought to learn from and synthesize the works of such varied thinkers as Kant, Hegel, Marx, Freud, Weber, and Lukács.[4]

Since the 1960s, Frankfurt School critical theory has increasingly been guided by Jürgen Habermas‘s work on communicative reason, linguistic intersubjectivity and what Habermas calls “the philosophical discourse of modernity“.[6] Critical theorists such as Raymond Geuss and Nikolas Kompridis have voiced opposition to Habermas, claiming that he has undermined the aspirations for social change that originally gave purpose to critical theory’s various projects—for example the problem of what reason should mean, the analysis and enlargement of “conditions of possibility” for social emancipation, and the critique of modern capitalism.[7]

The concept arose as a way to explain questions which were not explained in Karl Marx’s works. There are many different “branches” of Neo-Marxism often not in agreement with each other and their theories.

What happens when “reason” is in decline, when the world appears to be moving in the direction of irrationality and political pathology? Martin Jay discusses how two Frankfurt School thinkers, Theodor Adorno and Jürgen Habermas, tried to salvage a critical version of reason. Whereas Adorno looked to art and aesthetics, Habermas appealed to practices of interpersonal communication and argumentation.

“Martin Jay is one of the most respected intellectual historians now working, and any book by him is an important event. His subject here could hardly be bigger: the idea of reason in Western thought over two millennia.”—Michael Rosen, Harvard University

Martin Jay tackles a question as old as Plato and still pressing today: what is reason, and what roles does and should it have in human endeavor? Applying the tools of intellectual history, he examines the overlapping, but not fully compatible, meanings that have accrued to the term “reason” over two millennia, homing in on moments of crisis, critique, and defense of reason.

After surveying Western ideas of reason from the ancient Greeks through Kant, Hegel, and Marx, Jay engages at length with the ways leading theorists of the Frankfurt School—Horkheimer, Marcuse, Adorno, and most extensively Habermas—sought to salvage a viable concept of reason after its apparent eclipse. They despaired, in particular, over the decay in the modern world of reason into mere instrumental rationality. When reason becomes a technical tool of calculation separated from the values and norms central to daily life, then choices become grounded not in careful thought but in emotion and will—a mode of thinking embraced by fascist movements in the twentieth century.

Is there a more robust idea of reason that can be defended as at once a philosophical concept, a ground of critique, and a norm for human emancipation? Jay explores at length the communicative rationality advocated by Habermas and considers the range of arguments, both pro and con, that have greeted his work.

A brief bio of Dr. Martin Jay by University of Wisconsin Press:

Martin Jay is the Sidney Hellman Ehrman Professor of History at the University of California, Berkeley. He is the author of fourteen previous books, including The Dialectical Imagination: A History of the Frankfurt School and the Institute of Social Research, 1923–50, which has been translated into thirteen languages; Marxism and Totality: The Adventures of a Concept from Lukács to Habermas; Adorno; Permanent Exiles: Essays on the Intellectual Migration from Germany to America; Downcast Eyes: The Denigration of Vision in Twentieth- Century French Thought; Songs of Experience: Modern European and American Variations on a Universal Theme; and The Virtues of Mendacity: On Lying in Politics.